Does 4G free brand advertising? by @TheAgencyUK

The dust has settled on the bidding process for the new 4G network in the UK with the main protagonists, Everything Everywhere, Vodafone, O2, Hutchinson 3G and Niche Spectrum Ventures (BT), shelling out a combined £2.34 billion for access rights. Not an insignificant sum you might say, but still only around 10% of the auction of the 3G network in 2000 and over £1 billion less than the Treasury had forecast.

Perhaps this not only reflects the economic situation, but also the that mobile usage has reached saturation point – Ofcom figures show that there are more mobile phones in the UK than there are people. As a result opportunities for growth in this market is limited and is reflected in the price telecom brands are prepared to invest.

So what does the launch of the 4G network mean for consumers and mobile usage?

The potential for mobile Internet is up to five times faster than current 3G speeds, that’s certainly not to be sniffed at, whilst advertisers have increasingly recognised the importance that mobile devices play in consumers’ lives. Linked with the proliferation and affordability of smartphones (63% of UK mobile users own a Smartphone according to Comscore*) this has been reflected in the growth of the mobile app and gaming market which has helped to drive spend on mobile advertising over the £200 million mark in 2011 – an increase of 153% over 2010* and a trend that is set to continue.

But how will this change now 4G is here?

In the short term the impact of 4G may be more limited than many predict for a number of reasons.

– Initial roll out of the 4G network was limited to 11 cities in the UK – 17 more are due to get coverage by the end of March 2013 – and only currently on the EE network.

– Ofcom have only just auctioned off the lower frequency bandwidths which are being freed up by the switch to digital TV. This means that other network providers will not have their 4G networks up and running until May 2013 and coverage will not be nationwide until the end of the year at the earliest.

– As with all new technology there is a cost implication, not only to purchase a 4G enabled device, but the tariff as well – a 24 month tariff on EE with a decent 3Gb of data costs £46 per month – which will price many consumers out of the market until the costs drop.

Despite this the longer-term implications for advertisers are potentially huge. The faster download speed of 4G will mean that after years of promise consumers will be able to use their smartphone or tablet like a PC or laptop without the aid of a WiFi connection. As a result web browsing on mobile devices will increase far beyond the one or two pages that current download speeds and patience allow, making mobile and tablet compatible websites a key expectation on consumers’ online interaction with brands.

What brands and advertisers must take into account is the functionality and personalised nature of mobile devices. Unlike traditional website formats, consumers will increasingly expect mobile sites to make the most of touch screen and geolocation technology to make the path to purchase as smooth as possible.

Perhaps the greatest area of opportunity for advertisers lies with development of more display advertising formats, many with the ability to incorporate video streaming and animation. We would should expect to see an increase in consumer interaction and click through rates improving as they are no longer put off by slow page load times and basic creative executions. In the US, where 4G has been available on networks for over a year now, advertisers such as American Express have been able to launch interactive mobile campaigns which deliver personalised video content, user generated content and social media content which users are able to tailor further to their specific interests.

With consumers able to research potential purchases more quickly and easily on their mobile device, brands that don’t have a mobile web presence can rest assured their competitors will. Research by the IAB showed that 24% of UK mobile phone owners made a purchase through their mobile device. This is a figure that is only set to grow, driven by the increase in tablet sales, the increased speed of transaction delivered by 4G and the advances in mobile payment technology, all speeding up the breakdown of the last barriers to mobile purchasing.

One other notable point that advertisers can learn from the development of 4G in the US is the profile of 4G users was skewed towards the 40yrs +. Traditional wisdom dictates that technology is driven by a young, dynamic early adopter audience, but with 4G price is a more significant factor. The same pattern can be seen in the take up of tablet devices in the UK with a greater proportion of over 45’s adopting than under 45’s**. With 85% of the country’s wealth now lying with the over 55’s*** this is maybe not so surprising and we would expect to see a similar pattern with 4G uptake with some of the 4.1 million tablet owners in the UK* being the main beneficiaries.

As with all new technology there is an uptake curve with the early adopters paving the way. The key for advertisers will be to recognise who these early adopters are and use them to develop and tailor our mobile advertising offering. This is the only way we can ensure we are leading edge when the majority of ad networks hit the market, or we risk getting left behind.

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